California lawmakers have approved and sent to the governor a measure that restructures and reduces backup catastrophe assessments on insurers participating in the California Earthquake Authority.
The bill, which Gov. Arnold Schwarzenegger is expected to sign, would replace existing legislation creating the quasi-public CEA, which is due to sunset in December of next year.
Organized 12 years ago with $700 million from participating home insurers, based on their share of the market, the tax-free fund now has $2.65 billion in immediate capital on hand. Under current law, in the event of a catastrophe exceeding that amount, insurers would be immediately assessed $2.2 billion and, if additional monies were needed, the fund would begin dipping into layers of reinsurance and eventually go to revenue bond money before finally hitting insurers with another assessment of $1.5 billion.
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